Kremlin raises Transneft tax to 40%, sparking investment cuts
The Kremlin is seeking additional sources to supplement the state budget, which the war in Ukraine strained. On Tuesday, the lower house of the Russian parliament, the State Duma, passed a law raising the corporate tax for some companies from 20% to 40%. Transneft has already announced that it will be forced to cut investments as a result.
27 November 2024 07:28
Vladimir Putin is once again targeting state-owned companies to shore up the state budget impacted by the war in Ukraine. This time, he has ordered an increase in the tax on profits of the state-owned oil pipeline operator, Transneft.
According to "The Moscow Times", at the president's request, the State Duma passed a law on Tuesday raising Transneft's corporate tax rate from 20% to 40% for the years 2025-2030.
Such a substantial burden could lead to a loss of financial liquidity for the pipeline operator, as the company stated that only a quarter of its profits would be allocated to internal needs.
After this decision, Transneft immediately announced that it would be forced to cut investments. This, in turn, means reducing funds for the maintenance of oil pipelines, oil depots, and fuel tanks.
"After a thorough analysis of production, economic, and geopolitical factors, experts predict an inevitable and significant reduction in Transneft's investment programme by 2026," the company stated in a declaration quoted by "The Moscow Times".
The operator also warned of the "negative impact" on related sectors, especially fuel and energy. From 6 December, Transneft announced a 13.8% increase in fees for transporting oil products. It also proposed increasing tariffs until 2030 to "ensure stable and reliable operations".
State-owned Transneft operates a pipeline network measuring 42,000 miles, which transports crude oil and fuels to maritime terminals.
